Business news 24 February 2023
James Salmon, Operations Director.
Late payments worsen. Rationing Fruit and Veg. Consumer confidence rebounds from historic low. High inflation could persist into 2024. Hunt warned that tax plan could hurt growth. And more business news.
Late payments worsen
Data from small business accounting platform Xero show late payments are worsening. The time it takes to get paid rose to 30.5 days in January, the longest payment time recorded since Septemberv 2020.
In January, payments to UK small businesses were also late by an average of 8.4 days, a significant rise of 1.8 days since December 2022, and the highest level since August 2020.
Late payments are a serious problem for small businesses already hit by inflation, energy costs, staff shortages and facing a consumer whose disposable income has shrunk.
If you have late payers, ask CPA how we can prompt cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
Rationing Fruit and Veg
4 Supermarkets have now announced the rationing of fruit and veg (Asda, Morrisons, Tesco & Aldi) as cold weather in the med and North Africa has disrupted harvests and UK producers haven’t filled the need due to the increased cost of heating greenhouses and have therefore delayed planting crops.
Other northern European nations who didn’t Brexit aren’t having similar issues.
Growers say shortages of tomatoes, peppers and aubergines could last until May. The Department for Environment, Food and Rural Affairs (Defra) however claimed the UK’s supply chain was “highly resilient” and “well-equipped” to deal with disruption.
Consumer confidence rebounds from historic low
A survey by data company GfK shows that consumer confidence has unexpectedly bounced back from historic lows to hit the highest level since April 2022. GfK’s consumer confidence index has risen by seven points in February, although the headline score remains at a “severely depressed” -38.
While confidence in the general economic situation over the next 12 months is up by 11 points to -43, confidence in personal finances increased by nine points to -18. The overall uptick follows the index falling three points to a near-historic low of -45 in January.
Joe Staton, client strategy director at GfK, said: “While it’s too early to talk about ‘green shoots of recovery’, the uptick across all measures should be welcomed.”
Linda Ellett, UK head of retail and leisure consumer markets for KPMG, commented: “Household budgets are squeezed by higher prices, with energy, broadband and mobile phone costs set to rise for many households in April. Despite the uptick in consumer confidence, levels remain low overall.”
High inflation could persist into 2024
Bank of England rate-setter Catherine Mann has warned that without further increases to interest rates, inflation could remain high into 2024. Ms Mann, a member of the Monetary Policy Committee, told an event hosted by the Resolution Foundation think-tank that she does not think the current level of rates are “in a restrictive stance,” adding: “I believe that more tightening is needed, and caution that a pivot is not imminent.” She added: “We have an inflation remit, and we will achieve it one way or another. Failing to do enough now risks the worst of both worlds… as monetary policy will have to stay tighter for longer to ensure that inflation returns sustainably back to the 2% target.”
Hunt warned that tax plan could hurt growth
Business leaders and economists have warned that Jeremy Hunt’s tax plans could hinder a potential economic recovery, saying the Chancellor’s upcoming increase in corporation tax will hold back growth. Jagjit Chadha, director of the National Institute of Economic and Social Research, said the tax rise will “act as an ongoing drag on the economy,” adding: “Business investment is much lower than it should be and an increase in corporation tax is not going to help it recover.”
Martin Beck of the EY Item Club commented: “Just as things are looking better, they’re going to raise corporation tax and get rid of the super deduction. Public finances have improved, so is it really necessary?” He added: “Corporation taxes are paid by a combination of workers through lower wages, customers through higher prices and shareholders through lower dividends, so we’ll all feel the pain somehow.”
Former Depop CEO Runar Reistrup, chief executive of freelancer platform YunoJuno, said: “If I was a starting a business I would think twice before basing it in the UK with the tax rise. It will hurt the UK’s ability to produce future tech unicorns.”
Meanwhile, Rolls-Royce and BAE Systems have added their voices to those calling on the Chancellor to scrap a planned hike in corporation tax, from 19% to 25%.
Steel industry concerned over support timetable
The steel industry says more jobs could be cut before the Government delivers support for energy bills, with Gareth Stace, director general of industry body UK Steel, saying British Steel’s decision to axe 260 jobs could be the start of a trend in the sector. Ministers have proposed changes that would bring costs faced by the UK’s energy-intensive industries in line with those charged in other major economies, with a consultation on the plans set for the spring. Around 300 firms employing 400,000 workers stand to benefit from the changes, which would see them exempt from certain costs and taxes. Mr Stace said the Government’s proposals would go a “long way to bridging the gap” between what UK steelmakers pay compared to competitors in the EU but warned that the time taken to implement them was “particularly concerning.”
Electric car production jumps in January
Figures from the Society of Motor Manufacturers and Traders (SMMT) show that the number of electric or hybrid vehicles produced in January was up by almost 50% on a year ago. A total of 28,329 electric or hybrid vehicles were produced, representing more than four in every ten cars made in January. SMMT data shows that overall car production was “stable” last month, with output down by 0.3% to 68,575. Production for the UK increased by 5.6% year-on-year, while exports fell by 1.5%. Mike Hawes, chief executive of the SMMT, said: “Automotive manufacturing can drive long-term growth for the low-carbon economy but the sector needs competitive conditions to attract investment.” Richard Peberdy of KPMG commented: “An easing of supply shortages and continued demand for new cars, despite the cost-of-living squeeze, is keeping the market moving, but medium to longer term questions remain unanswered.”
Record demand for London office space
Analysis by real estate services firm Avison Young shows that firms in the professional services sector took up 50% more central London office space last year than in 2021, acquiring a record 2.5m sq ft in 2022. Workspace uptake from law firms, accounting businesses and consultancies surpassed highs recorded in 2010 by 35%. The increase was driven by a spike in demand for services, as well as net zero targets that have seen firms opt for more environmentally friendly workspaces as they look to achieve their climate goals. The report also shows that London’s financial sector took up 2.2m sq ft of office space in 2022, the biggest uptake of office space since before the pandemic. However, tech, media and telecommunications firms saw their office take-up levels drop 45% below 10-year averages.
Crypto
Sam Bankman-Fried, founder of FTX, the collapsed crypto exchange, was charged with four new criminal offences, including conspiracy to commit bank fraud and securities fraud on top of the original 8. Prosecutors allege that Mr Bankman-Fried developed a “series of systems and schemes” through which he could “access and steal” billions of dollars of customer deposits.
John Wood
John Wood revealed that the oil services company had rebuffed 3 offers from US private Equity firm Apollo, with the latest offer valuing Wood Group at £1.6 Billion. Apollo have until 22nd of March to make another offer.
Howden
Howden Joinery said profit was up as the company targets 1,000 depots in the UK. The London-based kitchen and joinery supplier reported that pretax profit for 2022 was £405.8 million, increasing 3.9% from £390.2 million a year ago
Mondi
Mondi announced a surge in profit in 2022 which outperformed against analyst expectations, while cautioning on 2023. The paper and packaging firm reported a pretax profit of €1.56 billion in 2022, up from €712 million in 2021.
Hays
Hays reported a double-digit jump in net fees but suffered a fall in half-year profit, as it started to look for a new chief executive officer. For the six months that ended on December 31, the London-based recruitment company said net fees rose by 15% to £651.9 million from £565.3 million a year before.
Gender pay gap will not close until 2044
Analysis by the Trade Union Congress (TUC) shows that the gender pay gap is almost 15% and widens “dramatically” after women have children. The report also reveals that women effectively work for free for 54 days due to the discrepancy between what men and women are typically paid. Women aged between 50 and 59 have the highest pay gap of 20.8%, while for those aged 60 and over it is 18.4%. The gender pay gap is largest in the South East of England (17.9%) and East of England (17.5%). TUC analysis of official data shows that the gender pay gap has fallen by an average of 0.4 percentage points a year since 2011. At the current rate of progress, it will take until 2044 for pay parity to be achieved. TUC general secretary Paul Nowak said: “Working women deserve equal pay, but at current rates of progress, it will take more than 20 years to close the gender pay gap.” He added: “It’s clear that just publishing gender pay gaps isn’t working. Companies must be required to publish action plans to explain what steps they’ll take to close their pay gaps, and bosses who don’t comply with the law should be fined.”
Why should you become a CPA member!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!
No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!
If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA for purchase on recourse?
CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.
Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.
Just call 020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
You put up with the PAIN – now claim the GAIN!
Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients
Check our compensation calculator to see how much your business could be owed!
Discover NOW the potential value of late payment compensation hidden in your sales ledger!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.